Hourly Rates and Discounts

Question: Can anyone provide information on the current hourly rates charged by experienced independent contractors for technical writing in the Chicago area? I'm located in the western suburbs, have nine years of experience, and am currently developing user guides and related projects. I realize this is a sensitive area, but I would appreciate any information that you can share.
Summary of Responses
I think that some consultants with long-term direct client relationships earn over $40 per hour, but most major Chicago companies, especially downtown, work only with a limited set of agencies.
If you work directly with the client, you may be able to make more (but not always). I know two top independent writers in Chicago who billed at quite high rates ($85 and $100 per hour) a couple of years ago. But they are the exception, not the rule. Both have spent over 15 years building a client base; one is highly technical, the other is a trainer as well as a writer. Rates and salaries here are down 20% from what they were in 2000. Clients appear to prefer writers with three to five years experience, based on what they are willing to pay.
If you are a security expert, ex-programmer, or know SAP, however, you may be able to charge more than average. Also, medical writers here earn excellent rates, if they have pharmaceutical expertise.
As for Chicago versus the Rocky Mountain area, our industries have still not recovered from the 2001-2003 setback. I'm glad to hear that you folks are doing well, but the Midwest (Ohio, Indiana, Illinois, and Michigan) is still floundering. Chicago has far fewer company headquarters than it did ten or fifteen years ago. If you have a friend in Independent Writers of Chicago, ask what their latest survey showed. Also, see the chapter on rates in the latest Writers' Market.
The Agency Factor: The highest hourly rate I know of at this time through an agency (in Chicago) is $40 per hour (for an independent, not a W2). I've seen rates as low as $18 per hour. $40 per hour is the top rate agencies are paying independents (in Chicago) for onsite full time work. Most agencies pay $30 to $35 per hour.
If agencies are paying $40 per hour (in general), you can bet that they are charging the companies at least 30% to 50% more than that. Agencies always pay the contractor less than what he or she could get on his or her own. However, they've also done all the legwork and sometimes have benefit packages that you can buy into, so there are tradeoffs.
Rates in Other Areas: While I do not know the Chicago market, this seems rather low to me. The Rocky Mountain Chapter is about to conduct its (usually) biennial salary survey, so our data is pretty old, but in our 2003 survey for the Denver market, the median hourly rate was $48 per hour, down $2 per hour from our previous survey in 2001.
I am in Ann Arbor/Detroit when at home, and $40 per hour seems to be the top. The bottom is yet to be determined, but I've seen some at $12 per hour in Florida, and $17 per hour in Michigan. I have also seen postings that cite $75 per hour. If you have expertise in a particular area such as wireless networking or other hot technology, you should expect more.
I'm on the west coast, but in the smaller town of Santa Barbara. Through agencies, $40 per hour is about what's expected. Direct, I think many people charge around $50 per hour, and have for years. My rate is a bit higher, but I have long-term clients who seem happy.
Here in the San Francisco Bay Area, hourly rates for contractors in the "high tech" arena (i.e., the "computer" software/hardware, etc.) have varied over the past 6+ years from $100 down to $25 per hour as the economy here has had its ups and downs. Personally, I always thought the "high" rates were always outrageously high, while the "low" rates have always been outrageously low considering how expensive it is to live around here. A fully-qualified "senior" tech writer in the Bay Area has a chance of getting as high as $70 to $80 per hour here (and, yes, I do know people getting these rates at this very moment). This is usually for contracts that initially require 100% onsite work, regardless of how many hours per week. The "low" price for a senior writer seems to be very fluid at this time, although it looks like it's stabilizing right now at $50 to $60 per hour (for a senior writer).
I haven't seen any responses yet from Canada, though I may have missed it, and thought I'd give my personal perspective from Toronto.
I've been both contractor and corporate over a career of 30+ years, and decided about two years ago that I'd never be "captive" again - waaaaaay too much corporate b-s. I checked out agencies in Toronto, and the typical rate was $30 per hour. One agent told me "We never pay more than $35 an hour". They bill out at around double this, of course. If I hustle my own work and can find it in my particular areas of expertise — aerospace, IT, digital imagery — I can get $45 to $50 per hour (even more for rare special needs). If not, I'll take that agency job for $35 per hour, but keep it short-term in order to stay available for the better jobs.
Wow, how that market has changed in six years then! I haven't done any tech writing since 2000. But I was living in southern Ontario at that time, and regularly getting $40 to $50 per hour through agencies (more if I contracted directly ) as an intermediate level tech writer.
In the Atlanta market, we (TrainingPros) are paying our tech writers, on average, $50 per hour (1099). Local Market vs. Remote Markets Rates are based on where you live, not where your clients are located.
Who says so? I say the market into which you are selling AND your self-image, determine the rate. If your local market has a lower rate, you can charge the local rate to have a competitive advantage, or charge the market rate in the target market, if you have advantages other than price that make you desirable.
Almost all of my clients are local. Otherwise I think it would be difficult to assign a different rate for different locations. What criteria would you use? Using one rate avoids the confusion of all that.
I'm not inclined to agree. You'd get beaten to a pulp in Chicago (because good organizations can do the work, and will, for less), and leave “money on the table” in San Francisco. It's important to know what the norm is in each place.
Most of my clients are remote. I charge a single base rate that goes up if the complexity and service warrants it (for example, a basic technical writing job will cost less than a job that also involves style guide or template development). I do everything time and materials, and when I sub-contract I don't typically reduce the rate the client is being charged because subcontracting involves additional oversight.
I've got clients in Houston, the San Francisco Bay Area, and the Washington DC area. I have my own small business and subcontract some work to others. When I am very busy, I don't do all of the desktop publishing, editing, or graphic design work on each project since I know others who do these tasks very well. I pass the lower rates they charge for this work on to my clients — so, for the client, the average cost is averaged down.
So -- what if a client hires a remote contractor? Should the client pay the going contractor rate for its locality, or the local rate based on the contractor's "point of origin"? Isn't this the same business issue that revolves around outsourcing any job to anyplace, especially outside the USA? Every client has the right to go out and find someone who can do the work for less money. Let's face it, it's happening in every facet of business in the USA today -- we all benefit and we all lose from it. Don't we all look for a bargain when we can get it?
Globalization and Commodity Work Globalization will have an affect on rates. There will be in increase, for instance, in the rates in India, over time, and as that market gets tight for skilled tech comm people (demand, rumor has it, is already exceeding supply, and affecting reliability of delivery dates). Although our rates came down due to multiple factors in a short period, they will rise as the baby boomers retire and our labor gets shorter, and as offshore labor markets get tighter.
We must differentiate ourselves from a commodity offering. However, the commodity of technical communications functions at a certain norm, like a float. Many of us will be above that norm, and can justify it through our services. Many will be below that norm because we are seeking the level we should be , or because local offerings are in a depressed state. The norm was hugely affected by the .com bust, 9/11 and the growing trend to offshoring to countries with low labor costs. However, the norm may be rising somewhat because of a recovery in the U.S. nearly everywhere except the central corridor, and the tightening of the labor market in other countries.
Client Discounts
Do you offer a discount of some kind for long-term, bread-and-butter clients who trust you implicitly, and whom you trust too?
Yes...if I don't have to go through a middleman.
We don't discount. At the end of the day, our cost is about 83% the contractor's rate. I have no room for discounts. But, we do extra stuff for our clients. We research, we network, we connect them with resources, we post things at STC if they ask, and we do our best for service (extra mile).
I also offer discounts. Since I work directly with my clients, I rarely bother with anything beyond a handshake — or a nod by computer, as the case may be. I do prepare a project plan or doc plan that describes the task and includes a cost estimate and all the potential risks and contingencies I can think of. It is in that document that I offer additional services by my network at other rates, including graphics support and desktop publishing.
Other Factors that Impact Rates
One of the more interesting contract developments to evolve in the last year or so is that of where the contractor works: onsite or offsite. For myself, if a client requires that I work onsite 100% of the time, I charge higher rates (especially if they also require 40 hours per week). If they are willing to let me work offsite from the start, then I will lower my rate. Obviously, I do this while also leveraging whatever qualifications I bring to the contract. The rates I charge for contracts are dependent on the following factors:
onsite vs. offsite requirements/allowances
if the client requires onsite work, I also consider how easy it is to commute to their office by car or public transit
total hours per week and flexibility
fixed-time contract or open-ended contract, based on required deliverables
current engineering and development status of project (i.e., new project for client or established product)
any previous documentation efforts relevant to the project, especially when projected timeframe is questionable
existence of other doc writers on the same project — if so, how many contractors, how many staff writers?
who is managing me (e.g., a pubs manager versus an engineering or — shudder — a marketing manager)
existence of an established template and style guide, or requirements to create a new template for my deliverables
The questions you should be asking are what are my expenses, what profit margin do I want, and what will the market bear for the skill set I have? You are an independent contractor because you want to make a living, not run a charity. The $12 to $20 per hour rates won't get you far, and sell your skills short. I wouldn't want to work for a client who thought they could get quality documentation at intern level rates.
When calculating your expenses, don't forget things like Social Security taxes, insurance, office space rent, living expenses, supplies, hardware and software, retirement, and vacation. If you recently had a full-time job, one way of figuring out what you need is to take your salary and figure out the hourly rate for that, then add at least 50% to cover expenses and benefits. This will tell you your break-even rate.
For example, if you make $50,000 per year at a corporate job, that works out to about $24 per hour. Multiple that by 50% (add $12 to the $24) and you need at least $36 per hour just to make expenses, assuming that you are working 40 hours per week.
Corporate jobs are 2000 hours per year, assuming two weeks vacation at 40 hours per week. Contractors typically work about 1000 to 1500 billable hours per year. So you need to take that slack time into account when setting your rates as well.